After two week break the Leveson Inquiry resumed on Monday 27 February 2011, kick-starting module two, examining the relationship between the press and police. It was, in many ways, the most revealing week of the Inquiry so far.

The morning hearing began with an opening statement from Robert Jay QC, inquiry counsel. He said the Met had a strategy to notify potential victims of phone hacking that had not been properly executed, and pointed out it could be viewed as a “deliberate failure” to avoid drawing attention to the relationship between the force and News International.

The first witness of the day was Sue Akers, Detective Assistant Commissioner of the Metropolitan Police, who gave evidence in the last week of module one on several police operations into alleged criminality at News International.

Akers told the inquiry senior figures at News International were aware of widespread phone hacking at News of the World as far back as 2006, the Leveson Inquiry has heard. She was asked about a 2006 email sent from Tom Crone, then head of legal at News International, to editor Andy Coulson detailing information received by Rebekah Brooks from the police.

It described payment records from News International to private investigator Glenn Mulcaire totalling over £1 million, and said police were going to contact “RW”, believed to mean Rekebah Wade, (Brooks’s maiden name), to “see if she wishes to take it further”, referring to he potential for a widespread investigation into phone hacking at the News of the World.

This evidence contradicted a 2009 statement from John Yates, then Assistant Commissioner at the Met, who claimed no further investigation was needed into phone hacking. He resigned over the matter in 2011 following further revelations discrediting his conclusion.

Akers said Operation Elevden had revealed one public official was paid £80,000 by a journalist over several years and another journalist had been given over £150,000 to pay sources including public officials, adding that the authority level for payments seem to have been made at senior level and a “culture of illegal payments” existed at the Sun. The investigation would continue to look at “regular, frequent and sometimes significant sums of money” paid to public officials by journalists, and staff members are still examining a database of 300 million emails recovered from News International.

The inquiry also heard from Neil Garnham QC, acting for the Met, who said an increased terrorism threat during the summer of 2006 had drained resources from the original investigation into phone hacking.

Lord Justice Leveson said evidence gathered from Mulcaire offered up “veritable Aladdin’s cave of information” and said: “I would like to understand… why the police shouldn’t have gone to News International and said: ‘This is what is going on… what’s been happening, what are you going to do about it, how are you going to make sure it doesn’t happen anymore’.”

The next witness was Brian Paddick, the former Metropolitan Police Deputy Assistant Commissioner. He said information held by private investigator Glenn Mulcaire could have put people in witness protection programmes in danger, as a printout from Mulcaire’s computer suggested he held information on people who had been placed under witness protection by the police.

This would have included individuals like Robert Thompson and John Venables, convicted of the murder of toddler James Bulger in 1993, who were assigned new identities for their own safety after being released from prison. He added:

“People are only put into the witness protection programme when their lives are potentially at risk or in serious danger… For this to be in the hands of Mulcaire and potentially the News of the World is clearly worrying.”

Paddick, himself a phone hacking victim, said his name had appeared in Mulcaire’s notebook and on his computer as a “project”. Despite this, police told him there was no evidence to suggest his phone had been illegally accessed. Last month a judicial review into the notification of hacking victims, resulting from a claim brought by Paddick and Lord Prescott among others, found the police had acted unlawfully.

He said he had the “utmost respect” for DAC Akers but believes an external investigation into the Met should be carried out by a team with no link to the force. He added:

“I’m not saying at all that there shouldn’t be at every level good, healthy communications between the press and police. We have to draw a line when it comes to police officers being paid for information. I do not accept – I might be old fashioned – that if a story is in the public interest you can pay a public official to disclose information.”

The final witness of the day, appearing in the afternoon hearing, was Lord Prescott, also a victim of phone hacking. The former deputy prime minister said he believed the police had acted under a “conspiracy of silence”, as he had approached the police and News International several times from 2006 in order to discover whether his privacy had been breached and to what extent.

Rather than accessing his voicemail, Mulcaire had hacked into the phone of Joan Hammell, Prescott’s chief of staff. It is now known that Mulcaire intercepted 45 messages between Prescott to Hammell, Despite AC Yates stating the investigation had not uncovered any evidence to suggest Prescott’s phone had been “tapped” in 2009.

Prescott told Lord Justice Leveson his name was on a piece of paper recovered from Mulcaire’s notes and appeared twice in tax invoices between the private investigator and News of the World. He said: “The evidence was there [that I had been hacked]. How much evidence do you want to have unless you don’t want to look for it?..I thought the most important thing was the role of the police and they hadn’t fulfilled their responsibilities.”

Prescott was also asked about the relationship between politicians and proprietors in his experience as deputy leader. He replied:

“Murdoch operated with all governments. I’m not the best person to ask about relationships with the press because mine has never been good. I’ll give you my opinion. With regards to the Murdoch press, I always thought it was wrong that politicians at the highest level were too close to Murdoch… There is always a price. It’s not exactly corruption and I’m not accusing them of that [but] I thought it gave a corrupting influence that they had too much influence and power.”

The first witness in Tuesday’s morning hearing was Simon Hughes MP, who said the police initially gave him limited information over the hacking of his phone by private investigator Glenn Mulcaire. He was shown documents recovered from Mulcaire listing names of three senior journalists at the paper alongside his personal information last year. He was frustrated “three or four years had been lost”, during which illegal activity may have continued, because action was not taken by police in 2006. He added:

“[The police] indicated there may be in this book some names of other people with whom Mr Mulcaire was working. If there had been more robust action in 2006 a lot of the illegal action might have been shut down and a lot of the people who are now known to be victims might not be victims or might not have suffered as much. It was clear from September 2006 at the highest level the News of the World knew about this and therefore it was in the public interest that the News of the World and their employees should be held to account.”

Hughes pointed out Mulcaire’s conviction in 2006 was based around the assumption he had received £12,300 from the paper, when in fact a list of bank transactions shows he was paid over £400,000 by the paper before his arrest in transfers alone.

The MP said intrusion into his private life, including a Sun article revealing intimate details about his personal affairs, which resulted from the paper allegedly obtaining phone records, had a direct impact on his political reputation. He told the inquiry journalists had regularly followed two of his friends on the assumption he was romantically involved with one or both of them.

Jacqui Hames, a former Met police officer and presenter of Crimewatch, held back tears as she told the inquiry her employee file could have been leaked to the press by someone in the Metropolitan Police. She said information obtained by private investigator Glenn Mulcaire could only have come from her personnel file and said someone had “sold me down the line”.

Hames described seeing her personal information in notebooks recovered from Mulcaire last year, including her payroll and warrant numbers and previous police accommodation, which she said could only have come from her police employee file.She became visibly upset and started crying when describing her experience of being placed under surveillance by the News of the World in 2002. She said:

“It is very difficult. By coming here you stick with your head above the parapet. The impact on us is important because it is very easy to compartmentalise people because celebrities have clearly suffered, as have many others. It’s easy to dismiss people because they should be able to put up with it. But no one from any walk of life should have to put up with it.”

Hames told the inquiry she and then husband Dave Cook, a detective chief superintendent, were routinely followed and had their emails tampered with while Cook led a review into the 1987 murder of Daniel Morgan. Rebekah Brooks told Cook and Dick Ferdorcio, the Met’s head of press, this was because it was suspected the pair were having an affair with each other, despite being a well-known married couple.

Hames told Leveson LJ she suspected there was some collusion between those convicted of Morgan’s murder and the newspaper. Jonathan Rees, a private investigator allegedly employed by News of the World, was cleared of the murder last year, after the trial collapsed. Brooks allegedly promised to investigate the link between Rees and Alex Marunchak, then senior news editor at the paper, but Hames said nothing further was done. She said:

“I cannot think of one reason why that would be in any shape or form a valid reason to put us under surveillance. We had been together for 11 years, we were a well-known couple, it wouldn’t have taken much to completely refute the allegation.”

Hames, who now advises officers on media relations, told the inquiry the police should have open and honest discourse with the media, as long as relationships with journalists “maintained professional integrity”.

The afternoon hearing began with a second appearance from Chris Jefferies, who gave evidence to the inquiry last year. The former landlord of murder victim Joanna Yeates detailed his experience with the police and press following his arrest for the murder in 2010, of which he was later cleared.

He discussed evidence given by Daily Mirror editor Richard Wallace, who said journalists from the paper were told in an unofficial briefing that Avon and Somerset police “were confident Mr Jefferies was their man.” Lord Justice Leveson said he had received a letter from the police force challenging Wallace’s statements “in a number of respects”.

Jefferies said he believed police took a long time to lift his bail in order to suggest he had been arrested on the basis of stronger evidence that was the case. He was cleared as a suspect in March 2011 even though Vincent Tabak had been charged two months earlier, after confessing to manslaughter. Tabak was subsequently convicted for Joanna Yeates’ murder.

Avon and Somerset police have denied leaking information to the press but admitted accidently disclosing Jefferies’s name to journalists. Jefferies told the inquiry information published in the Daily Mail the day before his arrest could only have come from his police statement. The paper reported Jefferies had heard Yeates leave the property with two other people, when in fact he had told police he could not identify the individuals, or whether one of them was his tenant.

Nick Davies, the Guardian journalist who broke the phone hacking story, said the scandal would not have come to light without unofficial meetings between police officers and the press.

He said the police should not be prevented from speaking to journalists without authorisation from press officers, and that losing unauthorised contact would lead into “dangerous territory”. He added: “Without unauthorised contact between the press and police the Met police would have been allowed to carry on misleading press, parliament and the public about the phone hacking scandal.”

Davies said such relationships only become problematic if they prevent investigations, such as the original 2006 investigation into phone hacking, from being carried out correctly. He said:

“Something went catastrophically wrong in that inquiry and its subsequent public statements. If part of that failure was to do with cosy relationships which existed between the tops of those two organisations you can see how the relationship can go wrong.”

The journalist told Lord Justice Leveson that 90 percent of the work he does is off the record, meaning he will use the information in stories but will not attribute it to specific individuals. He said material provided from press officers can be inaccurate and “out of step” with the needs of the public, as they are employed to protect the interests of the organisation. Davies told the inquiry last November he had developed a series of stories on the phone hacking revelations, published in the Guardian, from a briefing from Scotland Yard and consulting with human sources.

Wednesday morning’s hearing began with Detective Superintendent Phillip Williams, who led the original phone hacking investigation in 2006. He made it clear that in 2006 the police had been aware that phone hacking could be widely used by the media, and possibly criminals. He told the inquiry he was aware there may have been more hacking targets, outside of the royal family, but that it had been hard to prove, and said although police were aware Mulcaire was obtaining information for the media it was not clear whether this was legal or not.

William said a list of potential victims – 148 or 419 individuals – was drawn up to give an indication of the scale of the hacking. Jay QC pointed out many of the names were from outside the royal household, indicating it was not just Goodman using the services of the investigator.

Williams said: “We were all aware what the speculation was and how this might be further than these two men because that was part of our discussion whether there might be other defendants. At that time we didn’t have evidence.”

He also revealed Rebekah Brooks, then editor of the Sun, was hacked around twice a week by News of the World from 2005, and was told by police in 2006.

Williams went on to tell the inquiry: “No-one in my team had any contact with any of the newspapers, I can assure you. At no time did it ever influence the direction we went in with that investigation. I can assure you if I had wanted to I could have stopped this investigation much earlier. It was my intention to make this very public.”

During the afternoon hearing Detective Chief Superintendent Keith Surtees told the inquiry the “moment had been lost” to conduct a full search of Clive Goodman’s desk at News International following his arrest, and said officers had been obstructed by members of staff who feared they could be threatened with violence.

He said: “I wanted to search the desk, I wanted to search the financial areas, I wanted to find who was involved in this illegal activity.

“[Officers] were asked to go into a conference room until lawyers could arrive and challenge it. It was described to me as a ‘tense stand-off’ by the officer leading the search.

“Our officers were effectively surrounded and photographed and not assisted in any way shape or form. The search was curtailed and did not go to the extent I wanted it too.”

Surtees said it would have been virtually impossible to check whether the list of 418 potential victims had been hacked without a suspect in mind and a search could have been conducted with numbers known to have been used only by Goodman and Glenn Mulcaire.

Detective Inspector Mark Maberly said one of three mobile numbers of News of the World journalists appeared in Mulcaire’s phone bill.

He told the inquiry: “There would have been aspects of the case I would have liked to ask them about. I had no firm evidence of their knowledge of voicemail interception or them tasking Mulcaire.

“It would have been the case if we did bring them in for questioning the likelihood is they would have made no comment as did the other two employees of the News of the World. We would have got nowhere.”

Maberly said police had investigated Mulcaire’s office numbers and two “hub” numbers at the News of the World, which could have been used by anybody at the newspaper.

The first witness of the Thursday morning hearing was Peter Clarke, former deputy assistant commissioner – named on Wednesday as the man who decided not to widen the original phone hacking inquiry — said there had been 70 anti-terrorist operations under way in the UK around the time Goodman and Mulcaire were arrested in 2006. He told the inquiry he had to borrow police officers from forces all over the country to help terrorist threats and was unable to stretch resources to the hacking investigation.

He said: “These were precious resources which I had been dragging from across the British police for a number of years. I hope that gives some context to the scale of the threat”.

He later added: “Invasions of privacy are odious, distressing and illegal [but] to put to bluntly they don’t kill you, terrorists do.”

Clarke said Lord Prescott should have been told his phone could have been hacked but it would not have been his responsibility to inform the then deputy prime minster. He suggested John Reid, home secretary at the time, had been briefed on the investigation.

During the afternoon hearing the inquiry heard from John Yates, former Met Ex-assistant commissioner. He resigned last year over a failed review of the hacking scandal, was shown to have had several dinners and private meetings with Lucy Panton, crime reporter on News of the World, and deputy editor Neil Wallis. Yates said Wallis was a close personal friend, and the pair would often go to football matches together.

He added: “I absolutely know and I guarantee that none of that played any part in my decision making. My conscience is completely clear on that.”

An email from News of the World news editor James Mellor to Lucy Panton shown to the court said Yates would be “crucial” to a story believed to be about a terrorist threat, adding: “really need an exclusive splash line, time to call in all those bottles of champagne”.

Yates denied an improper relationship with Panton, who he said he had known for over a decade, and other News of the World employees, although admitted he probably had shared champagne with the journalist in the company of others.

Leveson LJ said he was disturbed that Yates did not know about the hacking of voicemail messages from Prescott until 2010. The former assistant commissioner said there had been an indexing problem with evidence relating to Prescott and his assistant.

The judge pointed out officers had questioned Mulcaire over Prescott’s phone being hacked immediately after his arrest, and that by the next day they had established the information Mulcaire had on Prescott’s assistant was linked to the former deputy prime minister.

He added: “I am disturbed that your persistent requests didn’t reveal the answer. People were bleeding over these papers for Mr Prescott for some time, but somehow this is all slipped through the cracks.”

Yates told the inquiry: “I cannot tell you the amount of times I checked and sought further and better particulars about the possibility that Mr Prescott’s phone had been interfered with.”

Former Met assistant commissioner Andy Hayman was shown to have paid for a £47 bottle of champagne with his Met American Express Card. He said he could not recall whether he had been with Panton, or a colleague of hers, at the time.

Hayman was questioned over a 2007 lunch with Panton and Wallis, but said he could not remember what was discussed.

Jay QC said the lunch had also been paid for on Hayman’s work card. He was shown to have had several other dinners and meetings with Panton, Wallis and former editor Andy Coulson.

Hayman defended his column for the Times, for which he was paid £10,000 a year, following his decision to retire from the Met in 2007, but said he took the point it might create the perception of an improper relationship with News International.

Next week the Inquiry is due to hear from several former senior Met officers including Lord Blair, Lord Stevens and Sir Paul Stephenson, along with Elizabeth Filkin and Chief Constable Lynne Owens of the Surrey Police.